Car Finace Woes

sk065

Hi all

Looking for some advice please,

I purchased a new Ford Focus in March 2013 as part of a PCP deal putting 3.5K from a part exchange of my older vehicle into the equation. The Contract is now coming to an end and the car has a GMFV of around £7.5k . I was told at by the dealer at the time of purchase that the car would likely be valued at more than this and the difference I could use as equity towards a new car.

Unfortunately, things didnt quite work out that way and the car has been valued (by the dealer and independently) at around the GMFV therefore leaving me with little to no equity.

The dealer has offered a brand new fiesta for the same amount of money I am paying currently (another 2 years deal) with a £250 deposit when I trade in the Focus. I am now a bit weary as I dont want to be left in the same situation 2 years down the line and having to shell out the same or more money for a lesser car (seems to be a downward spiral).

I have been to my bank and they have offered a 4 years fixed rate deal for the £7.5K, which basically means I will be paying the same amount per month to the bank as I was to the car finance company, the caveat being that I will have a 6 years old Focus by the time I stop paying.

I was wondering what would be the best course of action in this case.

Thanks
S

Foxy-Stoat_3

If you like the Focus, get the loan and buy it. At least it will be yours at the end, unless you need a brand new car.

Apples2

It's all a trap to keep you tied to finance for the rest of your life.

Get a loan, buy a car, repay the loan, sell the car, buy a car, save.

thebritishbloke

They always use the line of "It'll have more equity than that" and it is true sometimes. More-so if you sell the car privately.

What rate is the loan that the banks offered you? If it's ~5% I'd just take that and buy the car. Nothing wrong with having a 6 year old ford.

sk065

Thanks all

It would appear that the Loan they are offering is at 12%. Ive tried others offering ~5% online but apparently my credit rating is not good enough. Have no idea why.....paying up all my credit cards on time etc.

Effectively Ill be paying around 2K in interest but at least ill have some equity at the end of the 6 years to put a deposit down on another car. I know ill be paying more in the long run but the monthly cost is exactly the same so I wont feel it on the purse strings if you know what I mean.

rs65

You are not tied to Ford. Try any other dealer you fancy and see what they offer.

sk065

Interesting - I was told by the sales rep at Ford I was.....

I thought things were a bit awry when he made a fake phone call to his imaginary boss to get a 'better' deal for me.

rs65

sk065 wrote: »

Interesting - I was told by the sales rep at Ford I was.....

You have a car on finance. Any dealer can take it as a trade in and clear the finance.

meer53

Hand the car back and take out a loan for another one.

thebritishbloke

Christ, I wouldn't take out a 12% loan to pay it off.

Does this car meet your day-to-day needs? Do you see any reason you might need a bigger car in the future?

You could try and look at other dealers to see what cars they've got and for what price - remember, you can always negotiate on the cash price of the car and then finance it with them.

sk065

I suppose I am justifying it by thinking that the ~2K interest I'll pay will nullify itself with the inference that the car will be worth around 2K at the end of the loan - I can then go on and use that as equity for another car so Im not sure how I would be out of pocket effectively?

My head is burst so my logic might be all wrong :P